If your advisor has you invested in any of these "Mutual Fund Misfires of the Market" with high fees and low returns, you need to rethink your advisor.
The easiest way to judge a mutual fund's quality over time is by analyzing its performance and fees. Our Zacks Rank of over 19,000 mutual funds has identified some of the worst of the worst mutual funds you should avoid, the funds with the highest fees and poorest long-term performance.
Below, you'll read about some of the funds included in our current list of "Mutual Fund Misfires of the Market." And if by chance you're invested in any of these misfires, we'll help and review some of our highest Zacks Ranked mutual funds.
3 Mutual Fund Misfires
Now, let's take a look at three market misfires.
Hartford Global Real Asset I (HRLIX): 0.97% expense ratio and 0.85% management fee. HRLIX is a Global - Equity mutual fund. These funds invest in large markets like the U.S., Europe, and Japan, and operate with very few geographical limitations. With a five year after-expenses return of -1.58%, you're mostly paying more in fees than returns.
Legg Mason BW International Opportunities Bond R (LWORX): 1.25% expense ratio, 0.5%. LWORX is a part of the Non US - Equity fund category, many of which will focus across all cap levels, and will typically allocate their investments between emerging and developed markets. This fund has yearly returns of -0.38% over the most recent five years. Another fund liable of having investors pay more in charges than what they receive in return.
Leader Total Return Institutional (LCTIX): This fund has an expense ratio of 1.88% and management fee of 0.75%. LCTIX is part of the Investment Grade Bond - Intermediate fund group. These mutual funds focus on the middle part of the curve, generally with bonds that usually mature in more than three years but less than 15 years. With an annual average return of 1.49% over the last five years, the only thing absolute about this absolute return fund is that it absolutely deserves to be on our "worst offender" list.
3 Top Ranked Mutual Funds
Since you've seen the most noticeably lowest Zacks Ranked mutual funds, how about we take a look at some of the top ranked mutual funds with the least fees.
Principal Capital Appreciation I (PWCIX) is a fund that has an expense ratio of 0.47%, and a management fee of 0.47%. PWCIX is classified as a Large Cap Blend fund. More often than not, Large Cap Blend mutual funds invest in companies with a market cap of over $10 billion. Buying stakes in bigger companies offer these funds more stability, and are well-suited for investors with a "buy and hold" mindset. With yearly returns of 11.18% over the last five years, this fund clearly wins.
BlackRock Advantage Large Cap Growth R (BMCRX) has an expense ratio of 1.12% and management fee of 0.57%. BMCRX is a Large Cap Growth option; these mutual funds purchase stakes in numerous large U.S. companies that are expected to develop and grow at a faster rate than other large-cap stocks. Thanks to yearly returns of 10.27% over the last five years, BMCRX is an effectively diversified fund with a long reputation of solidly positive performance.
PRIMECAP Odyssey Aggressive Growth (POAGX) is an attractive fund with a five-year annualized return of 11.53% and an expense ratio of just 0.63%. POAGX is a Mid Cap Growth mutual fund. These funds aim to target companies with a market capitalization between $2 billion and $10 billion that are also expected to exhibit more extensive growth opportunities for investors than their peers.
So, there you have it - if your advisor has you invested in any of our "Mutual Fund Misfires of the Market," there is a good probability that they are either asleep at the wheel, incompetent, or (most likely) lining their pockets with high fee commissions at your financial expense.
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